Microsoft Sells 200M Win 8 Licenses: Yawn

Microsoft touts sales of more than 200 million Win 8 licenses. Here are 5 reasons not to be impressed.

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Microsoft sold more than 200 million Windows 8 and 8.1 licenses during the controversial OS's first 15 months, Tami Reller, the company's executive VP of marketing, revealed Thursday at a Goldman Sachs technology conference.

Sounds impressive, right? Not exactly.

Sure, 200 million is a big number -- that's about one license for every 35 people on the planet, a level of ubiquity most companies would kill for. But Microsoft isn't most companies. Put into historical or aspirational context, Windows 8 and 8.1 have underwhelmed.

Not convinced? Here are five reasons not to be impressed.

1. Windows 8 sales can't keep pace with Windows 7's precedent.In January 2013, Reller, then CFO of the Windows division, said Windows 8 had sold more than 60 million licenses since launching the previous October. She said the pace roughly matched Windows 7's progress through the same period. In May, when Windows 8's license sales passed 100 million, Microsoft again said its new OS was performing comparably to Windows 7.

Microsoft's Windows 8 boasts have always been a bit suspect, but the company can no longer argue that Win 8 is selling as well as the previous version. Windows 7 license sales topped 240 million in the OS's first year of availability. In three more months, Windows 8 had moved only a little more than 80% as many licenses.

2. Microsoft defines "sell" differently than most of us.Microsoft's Windows figures refer to "sell-in" numbers, not "sell-through" numbers. Those 200 million Windows 8 and 8.1 licenses, in other words, derive from the volume sold to OEMs and retailers, not the number sold to actual end-users. The number of Windows 8 machines actually active in the wild is lower.

Microsoft's tally does not include volume licenses, such as those sold to enterprises. But analysts say volume deals have been sluggish, too.

Corporate Windows 8.1 uptake hasn't increased outside of isolated tablet projects, and even within mobility deployments, Windows 8 slates are activated less often than iPads, Forrester analyst David Johnson told InformationWeek last month. "Windows 8 and the enterprise aren't things you usually hear in the same sentence," said IDC analyst Al Gillen in a separate interview.

3. Some Windows 8 licenses are more valuable than others. Windows 8 Pro launched at a promotional price of $39.99, but some Windows 7 users could purchase it for as little as $14.99. In February 2013, though, the Pro version jumped to $199.99, with the standard version coming in at only $80 less. Though Windows 8.1 was released last fall as a free upgrade to existing Windows 8 users, the $199.99 and $119.99 prices still stand for everyone else.

What's the takeaway? A lot of Windows 8 licenses were sold at a discount. In theory, this tactic shouldn't have hurt Microsoft's bottom line -- by sacrificing licensing revenue, the company hoped to encourage Windows 8 adoption and thus revenue for its new Modern UI app ecosystem. In practice, however, this hasn't worked out.

Here's part of the problem: Many early Windows 8 adopters installed the OS on older PCs that didn't have touchscreens and were ill-equipped for Win 8's touch-oriented Live Tiles. Win 8 also shackled the desktop with knuckleheaded UI changes such as the missing Start menu, which only exacerbated the issue.

4. Windows licenses don't drive device sales as they used to.Reports last year claimed Microsoft offered OEMs cheaper Windows and Office licenses in exchange for ramped-up production of smaller Windows tablets. While such reports have never been verified, manufacturers have released a rash of Win 8.1 mini-slates in recent months, most of which come pre-loaded with Office. This suggests that just as Microsoft took an early hit with discounted Windows 8 licenses, the company might also have sacrificed upfront revenue to gain some of its more recent sales.

Regardless of behind-the-scenes negotiations between Microsoft and OEMs, many Windows 8 and 8.1 devices have sold well only following hefty price cuts. Microsoft presumably hopes these low-margin devices will eventually stimulate growth in more lucrative areas such as the Windows Store or Office 365 and other of the company's cloud-based services. But so far, much of Windows 8's modest momentum appears to have come at the cost of profit margins.

5. Windows 8 isn't popular on any form factor.Microsoft apologists sometimes point out that Windows 8 was predestined to post lower sales numbers than Windows 7 because the latter had the benefit of following Windows Vista, whose infamous flop drove demand for a modern desktop OS. Some have also suggested Windows 8 adoption has been stunted by the slumping PC market. With more people using tablets, some older PCs aren't being replaced, and others are being pushed into longer lifecycles. Both trends, or so the arguments go, decrease demand for a new version of Windows.

While these arguments aren't completely invalid, they ignore an important point: Windows 8 was designed as both a tablet and desktop platform. If the OS had been more appealing, that should have insulated it from fluctuations in the traditional PC market.

Unfortunately for Microsoft, Windows 8.1 tablets are still living off Apple and Google's table scraps. A barrage of holiday sales might have helped Windows tablet makers move a few more units -- but they couldn't stop record iPad sales or the continuing proliferation of low-cost Android slates.

Even if the PC slump isn't Windows 8's fault, the OS clearly hasn't helped. In January, Windows 8 and 8.1 accounted for a measly 11.7% of all desktop users, according to Net Applications. Windows 7 runs on almost half of all desktops, and even Windows XP, which will lose support in less than 60 days, more than doubles Win 8/8.1's market share. More than 60% of Win 8/8.1 users are still running the earlier version, indicating that 8.1 hasn't done enough to motivate the market. To add insult to injury, HP has started selling Windows 7 PCs in a "back by popular demand" promo.

Put simply, Windows 8's failure is twofold: It isn't popular among Microsoft's legacy customers, and it isn't popular among the mobile-minded new generation of users.

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

Dell has an article on downgrading to Win7 for the 8500 if you like. Search "dell How to Downgrade from Windows 8 Pro to Windows 7 Professional"

Or you do some of the fixes in information week make-windows-8-like-windows-7

Or you can just take the most used programs and pin them to the taskbar.

It was silly for Microsoft to break the way users interacted with Win7 just to promote the tiles interface especially on a machine which does not have touch anyhow.

HP was trying to ship systems with Win7 again, but I have not heard that it was a huge success.

Personally, I had bought a laptop withe Win7 and a free upgrade to Win 8. I dual booted for a while before switching to Win 8 mostly because the boot up times are faster, and I wanted to be able to run both the old and new programs.

Great article Michael... Numbers can be made to look any way you want them to look. I think this is a good case that illustrates that. MS is hurting from Win 8 sales I think. I also think they will come back. Why they continue to repeat history is a mystery to me.

awebb, Your comments are well taken, but I wonder how many of those 100 million licenses were FORCED upon consumers instead of actually sought out by them? For instance, a year ago when I wanted to buy a new PC, a Dell XPS 8500, Dell would not sell it with Windows 7, so I was stuck with getting Windows 8 Pro, even though I wasn't very happy about that. But I needed a PC for working from home, so I HAD to buy one. Given the choice, I would have chosen Windows 7 Pro in a heartbeat. Months later, it made me mad to see Dell (and now HP and others) touting that you can still get Windows 7.

If I could downgrade for free I would. Many of us long term desktop users would consider it an upgrade.

The article states, "Win 8 also shackled the desktop with knuckleheaded UI changes such as the missing Start menu, which only exacerbated the issue."

That pretty much sums it up for most desktop users. And I know many people with tablets but I know of NO ONE who has purchased a Win 8 tablet. Seems people are happy with Android or Apple in that regard, and aren't that interested in what MS Win 8.1 would offer. The problem is that Win 8.1's main feature, that of running native Windows programs such as MS Office, is not the "killer app" that MS hoped. People still use tablets as media consumption devices, not creation devices. People still go to lap tops or desktops to create "important" documents. And of course, people like me doing engineering work need the power and interface that only desktops provide. Windows 8.1 brings little to the table in that regard that isn't better served by Windows 7.

Perhaps Microsoft should put Windows 8.1 on sale again for $39 until April 8th for those upgrading from XP (assuming that older 2006 vintage motherboards would even run Windows 8.1, which might be a crapshoot).

At this point I think most enterprise customers think of Windows 8 as either a failure or as a "consumer" oriented OS, and will stick with Windows 7 for a VERY long time, and hope that Windows 9 or 10 will be more oriented for getting work done, or at least have an easy way to turn off the Metro apps and lock them out.

Thanks for breaking down the context here, Michael. #2 is one that a lot of people don't mention when they throw around Windows numbers. Based on what we see on our site, many IT pros want to read about Windows 8 tablets, but few are buying yet. Any of you seeing many Win8 tablets in the wild in your enterprises?

Good assessment, Michael. I've heard many explanations of why Windows 8 isn't selling beyond its captive OEM audience but the fact that it's a legacy end user system, decked out as a hipster, is the simplest.